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United Parcel Service Inc. (ticker: UPS) is the world’s largest package delivery company and a leading global provider of specialized transportation and logistics services. The company has invested in the emergence of liquefied natural gas (LNG) for its vehicles, and began adding LNG tractors to its fleet in 2002. UPS currently has more than 1,000 such tractors in service, and the company said LNG usage will help eliminate the need for 24 million gallons of diesel fuel every year.

On October 8, 2013, UPS announced the investment of approximately $50 million to build nine additional LNG stations for its vehicles. The company announced the addition of four such stations, along with the purchase of 700 more LNG tractors, for $18 million on April 23, 2013. Kenworth is the primary supplier of the tractors, but Mack Trucks’ new LNG tractor will account for 122 of the new vehicles. A total of 13 stations will be added to UPS’ fleet, and all are expected to be fully operational by year-end 2014.

The Atlanta-based company already started building stations in Tennessee and Texas. The newest structures will be constructed in Florida, Illinois, Indiana, Mississippi, Missouri, Ohio, and Pennsylvania. Its one existing station is located in Ontario, California.

The company said it has about 2,700 alternative fuel vehicles in its workforce, including electric, hybrid electric and liquid propane gas vehicles. According to UPS’ fact sheet, LNG’s prices are 30% to 40% lower than imported petroleum and carries 25% less CO2 emissions. There are no mileage constraints for the tractors using LNG; the tractors have a range of up to 600 miles with no route limitations.

David Abney, chief operating officer of UPS, said: “The natural gas industry needs companies to commit to using natural gas to help establish a reliable alternative to traditional fuel, and that is just what UPS is doing. The UPS strategy is both environmentally friendly and economically viable. LNG is becoming more readily available, plus it’s more insulated from market volatilities than diesel fuel.”

FedEx is also considering making a switch to LNG, according to the Wall Street Journal. Frederick W. Smith, FedEx’s (ticker: FDX) chairman and CEO, said he expects between 5% and 30% of U.S. long-distance trucking to be fueled by LNG during the next 10 years, as the cost of the trucks declines and fueling stations become more common. “If you’d asked me three years ago, I’d have said this is very tough, because the infrastructure wasn’t there,” he said.

According to the Department of Energy, there are currently 605 registered LNG stations in the United States.

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.